'India to be digitally-rich before being economically wealthy'

India's leading entrepreneurs agree that entrepreneurs need to take advantage of the favourable environment that allows for the easy creation of wealth for all.ARCHANA RAI | ET Bureau | August 21, 2017, 12:21 IST

As India's startup sector pads up for its next phase of growth, some of the country's top entrepreneurs and investors took the dais at The Economic Times Startup Awards to discuss a burning issue -`Growing Pains: Managing Culture, Scale and Returns.'

From being one of India's most celebrated entrepreneurs, Nandan, you are now also a very influential investor. What are you telling your investee companies about what it takes to scale a company?

Nandan Nilekani: I go back to the lessons we learnt at Infosys with (NR Narayana) Murthy and my other colleagues. It is important to have a great team, a team of people with complementary skills at the same time. All the people should have a common value system and need to have the same sense of deferred gratification.Because building a company is, as Murthy said, a marathon. It is not a sprint. You must be willing to forgo rewards for many years, if required, to get the rewards 10-15 years down the line. Then, of course, you need to have wonderful vision and execution.

How receptive are entrepreneurs when you speak of culture, especially when speed is of the essence?

Nilekani: I do not think anybody is implying that you sacrifice speed. They are not opposing things, and that is why I prefer to work with entrepreneurs who want to run marathons, who want to build big companies. If they really have a vision to do something great and transformational, they are the kind of people I support.

Sachin, you have spoken constantly of the need for regulation that supports businesses launched in India. Do you think this is an important part of building scale?

Sachin Bansal: If India has to become a developed country and we have to become leaders in innovation and technology, entrepreneurship is the way to go. There are multiple examples of countries using entrepreneurship as the engine of growth or job creation, and coming out of poverty. That engine needs to be nurtured.There are, sometimes, areas where Indian entrepreneurs and companies tend to be at a bit of a disadvantage compared to their global counterparts. What we need to do is, create a level-playing field for Indian entrepreneurs so they will be able to use their capabilities and investments to the maximum extent and create impact for customers.

Falguni, what do you think a founder has to do to scale a company?

Falguni Nayar: I think the Nykaa story has been one of huge consumer connect. We are really proud of the fact that we connect with our consumers not just at their need level of wanting to buy beauty products but also how they think of themselves, how they would like to see the society, and what matters to them.

Rajan, as one of India's most prolific angel investors what do you consider a metric of startup success?

Rajan Anandan: The success of a startup depends on the life-stage. Success happens when you get three things right. You need to have a team built out... that can take care of the company for several years. Second, you need to have found a product-market fit. That is quite hard. It takes several years to get the product-market fit right. Third, there should be enough traction to give the company sufficient runway to go for several years or to get to the next level of funding.Naveen Tiwari: Companies are all about building something that is sustainable and scale is clearly one of the big metrics of sustainability. (Building companies) is an ultra marathon. The other way to think of it is like a test match. You cannot play a test match with T20 batting.

(Entrepreneurship) is about building something sustainable. You need to do things systematically, whether it is the vision, which may evolve as time goes on, your strategy, which needs to go along with very basics of execution, having financial prudence, or being able to generate capital.There is no short cut to (making profits).You have to work session by session. We (InMobi) are probably in day one still (of a five-day cricket test match), third session, and I think we are doing well...

When you look at countries like China or Ireland, there is a lot of effort there to support growth-stage companies. In India, the government has done a lot but seems focussed on providing early-stage support...

Anandan: In the last two or three years, I do not think any government anywhere else in the world has done what this government has for startups.

We used to be able to hire the top 1% at universities in India and now it is a challenge because the top 1% wants to be like Sachin, Binny (Bansal, Flipkart co-founder) or Naveen. They do not want to work for a Google or another big brand. I think that is because of the success of Flipkart and InMobi and other startups in India.

This year, we are seeing money come in but mostly from large overseas investors, and therein lies a risk. Is there a problem for Indian startups because we do not have sufficient domestic capital?

Nilekani: The fact that global capital is coming is very refreshing because they are able to take these big bets. I am not sure if Indian capital has the appetite for this approach because, in some sense, this capital-spending is based on a winner-take-all kind of model where you rapidly get market share and then go towards profitability. There is a certain mental model not historically practiced in businesses in India. But I can see that certainly at the startup and scale up level, there is a lot of Indian capital now willing to invest.

I want to add one thing. We have all been talking about this, that we will get more business as per-capita GDP grows. That is in some sense saying that as people become richer, they will be able to purchase more.But there is something happening in India that we need to recognise - which is that Indians will be data-rich before they are economically rich. Thanks to everybody having smartphones, sensors and so on.So, suddenly, an individual has a digital footprint that is far more than the wealth he has. Therefore, the business models that will emerge in India will be those that allow people to take their digital wealth and convert that into economic wealth, and that is the trickle-up. It is not trickle-down. The big story is not just replicating a trickle-down kind of business model but using data to raise the quality of life for a billion people.